Chairman reflects on successful year

With Farmlands announcing a net profit before tax and rebate of $12.2 million, Chairman Lachie Johnstone discusses the financial year and shaping the future of our co-operative.

The 2017/2018 financial year can be summed up with one word – progress. We often speak of the journey our co-operative is on and it is important to emphasise while this is another step forward, our attention remains firmly focused on delivering the benefits our 68,000 shareholders want and need from their combined buying power.

Our performance

The return to Bonus Rebate is a distinct highlight for this year. We achieved this through making the hard calls to get our co-operative back into a position to deliver a rebate to its shareholders after a number of challenging years in the market.

On 23rd November in Hokitika, I was able to stand in front of your fellow shareholders at our Annual General Meeting and discuss how the measures we have taken have produced a $6.1 million Bonus Rebate – half of our net profit before tax and rebate. This delivered on our objective from last year’s AGM, when we stated our intention to return to Bonus Rebate in 12 months’ time.

This is just one step, albeit one that is positive. It is an acknowledgement of improved performance but we are not satisfied. We distribute this Bonus Rebate with a considerable amount of humility, while accepting a tick mark at this stage of our journey. It shows we are on the right track.

Our people

An overwhelming source of pride comes from the development of our people, which includes both our staff and our shareholders. We have been vocal in our desire to increase the talent pool of prospective Directors for our co-operative. An expanded, stronger talent pool has flow-on effects for rural governance throughout New Zealand. A strong co-operative needs to have shareholders thoroughly prepared to make the step up to the Board table.

The past 12 months – and the year to come – highlight the importance of rural governance development to Farmlands. We have welcomed three new Directors – Julie Bohnenn, Warren Parker and Murray Donald and at the time of writing, we will be welcoming more new faces to our Board table, with three more experienced Directors retiring – Joe Ferraby, David Jensen and Peter Wilson. While this is a considerable turnover in the space of 2 years, the fresh ideas and specialised skill-sets we are welcoming to the Board table means our co-operative governance continues to evolve.

We have had success with two initiatives over the past 12 months that were designed to bolster our rural governance stocks. The Board Observer role, a 12-month tenured position that provides exposure to the Board for one Farmlands shareholder, is now in its second rotation. Braden Hungerford spent 12 months with the Board of Directors, contributing to our meetings and learning how our cooperative functions. The new financial year has welcomed Robert Kempthorne into the Board Observer position.

While our Board Observers have full speaking rights, they are unable to vote on co-operative matters at the Board table. However, we foster development through mentoring, exposure to the discussions that shape our direction and the opportunity to learn from experienced Directors.

In addition to the Board Observer initiative, in collaboration with Silver Fern Farms, Farmlands hosted To the Core, a rural governance programme designed to expand the talent pool of prospective Directors even further. To the Core has been well received by both the participants and the broader community. The participation of Sir Eion Edgar, Stuart Heal, Maurice Noone and Juliet Maclean provided those attending To the Core with direct access to some of the most prominent figures in governance from rural and corporate backgrounds.

I was chatting to a governance expert about To the Core and they commented on how good they felt the programme was. This was also formally recognised by Cooperative Business New Zealand, who awarded Farmlands and Silver Fern Farms the Cooperation Amongst Cooperatives Award for To the Core. It reinforces the value of our commitment to development initiatives that will continue to create governance pathways for our own Board and the rural governance sector as a whole.

Our future

Acknowledging the need to build the skills of our people for the future has also been a catalyst for continued investment in staff training and development. Clearly, the challenge of the social licence to operate as a farmer and a grower has changed. Our shareholders are being challenged across more fronts than ever before – political, economic, social and environmental. Having strong relationships with our co-operative provides our shareholders with the support they need to turn these challenges into opportunities.

Investing in our Farmlanders provides shareholders with a demonstration of our desire to improve our offer and the value that only our co-operative can add.

On top of that, working with people that love what they do adds perspective to your own life. At our last Board meeting at the Farmlands support office in Christchurch, I looked across at a group of people having lunch. There were about 20 people, all sitting together, having a communal lunch and engaging in conversation. There were no phones to be seen, which may only be an observation but it also shows that our people value each other. This is a people business, whichever way you look at it.

I look back on the 2017/2018 financial year with a sense of optimism. We have said to our shareholder base we would deliver and we have. We are not complacent on the back of this announcement. Farmlands needs to adapt and with weather patterns, commodity pricing and social licence shaping how we operate, your co-operative will continue to strive to bring you more.

The motive of Together Stronger that united like-minded farmers in town hall and pub meetings 55 years ago holds true today. They may never have envisaged how our co-operative would evolve but their founding principles continue to inspire us. The challenge rests with us to help our shareholders understand the breadth of opportunities and the true potential of the business they own and how we can all work together to unlock this.